Settlement Agreements: No Second Chances
This blog is co-authored by Lesedi Dube, candidate attorney.
The finality of full and final settlement agreements is highlighted in an August 2025 judgment in the High Court. The court found that a settlement agreement between the applicant and respondent could not be rescinded on the basis of alleged prior non-performance of contractual obligations discovered after the finalisation of the settlement agreement. The court held that the settlement agreement, once concluded, was binding and could not be rescinded merely because one party later discovered facts it could have established with proper diligence before entering the settlement agreement. The court declared the settlement agreement an order of court.
The respondent was awarded a three-year tender by the applicant, a municipality, for event management services. After rendering services and submitting invoices, the respondent was paid for some work but not all. The municipality issued summons against the respondent, alleging overpayment, while the respondent counterclaimed for unpaid invoices.
The parties settled their dispute in December 2022, with the municipality acknowledging its indebtedness and agreeing to pay the respondent over R5.5 million. When payment was not forthcoming, the respondent approached the court to have the settlement made an order of court, which was granted in August 2023.
The municipality later sought to rescind both the settlement agreement and the court order, claiming that a subsequent internal investigation had revealed that some services had not been rendered by the respondent. The applicant argued that this discovery amounted to a fundamental error justifying the rescission of the settlement agreement.
The court reaffirmed the principle that a settlement agreement is intended to bring finality to litigation. The parties are bound by the terms of their agreement, even if one party later discovers facts which could previously have been uncovered with proper diligence. In this case, the municipality’s alleged mistake did not meet that threshold of a justifiable error entitling it to set aside the settlement agreement.
The court noted that the settlement agreement expressly stated that it was in full and final settlement of all claims between the parties but could be varied in writing by both parties. The municipality’s attempt to revisit the merits of the underlying invoices was contrary to both the principle of finality and the express terms of the settlement agreement.
The court dismissed the application to rescind the settlement agreement and confirmed the order making the settlement agreement an order of court to ensure its enforceability. The municipality was ordered to pay the agreed amount of over R5.5 million, together with interest, to the respondent.
This judgment is a clear warning that parties must conduct all necessary investigations before entering into settlement agreements. Courts will uphold the finality of full and final settlement agreements, even where a party suffers prejudice due to their own lack of diligence prior to concluding the agreement.
Bojanala Platinum District Municipality v Meme Ditshego Enterprise (Pty) Ltd (1770/2022, North West High Court, Mahikeng, 29 August 2025)